Normally, my eyes glaze over when the business press covers executive compensation issues. To me, the core issue isn’t whether CEOs are “overpaid” but how the rank-and-file workers are paid.
If support-level employees earn a fair wage (especially in comparison to the CEO’s pay), you can bet they’re motivated to excel in their job. But if they’re wildly underpaid compared to the top brass, then dissention and distrust will surely set in.
Consider that on average, a CEO who runs one of the 500 largest American companies (as measured by Standard & Poor’s index of the 500 biggest publicly traded common stocks) makes 319 times what a production worker does, according to The New Yorker (Jan. 4, 2010, p. 41).
That’s hardly a recipe for teamwork or a shining example of servant leadership. But it’s an excellent way to stoke jealousy and breed cynicism among lower-paid workers.
At Whole Foods, a company that often ranks highly among favored employers, no executive can earn a salary more than 19 times what the average employee makes. The longtime CEO, John Mackey, pays himself $1 a year. That may not guarantee a lovey-dovey culture, but at least it eliminates a potential source of anger in the workforce.
As a manager, you may not set compensation policy at your organization. But you can address perceived inequalities and treat everyone fairly. That’s the simplest and best motivator around.
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